ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
DELAWARE | 73-1352174 | |
(State of incorporation) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ý | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
PAGE | ||
FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Revenues | $ | 318,511 | $ | 269,910 | |||
Cost of revenues | 295,090 | 241,019 | |||||
Gross profit | 23,421 | 28,891 | |||||
Selling, general and administrative expenses | 21,201 | 21,570 | |||||
Operating income | 2,220 | 7,321 | |||||
Other income (expense): | |||||||
Interest expense | (292 | ) | (618 | ) | |||
Interest income | 282 | 39 | |||||
Other | 546 | 149 | |||||
Income before income tax expense | 2,756 | 6,891 | |||||
Provision for federal, state and foreign income taxes | 451 | 3,067 | |||||
Net income | $ | 2,305 | $ | 3,824 | |||
Basic earnings per common share | $ | 0.09 | $ | 0.14 | |||
Diluted earnings per common share | $ | 0.08 | $ | 0.14 | |||
Weighted average common shares outstanding: | |||||||
Basic | 26,921 | 26,655 | |||||
Diluted | 27,589 | 26,762 |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Net income | $ | 2,305 | $ | 3,824 | |||
Other comprehensive income, net of tax: | |||||||
Foreign currency translation gain (net of tax expense of $62 and $16 for the three months ended September 30, 2018 and 2017, respectively) | 401 | 1,107 | |||||
Comprehensive income | $ | 2,706 | $ | 4,931 |
September 30, 2018 | June 30, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 74,736 | $ | 64,057 | |||
Accounts receivable, less allowances (September 30, 2018— $6,359 and June 30, 2018—$6,327) | 214,763 | 203,388 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 75,972 | 76,632 | |||||
Inventories | 6,514 | 5,152 | |||||
Income taxes receivable | 3,350 | 3,359 | |||||
Other current assets | 10,214 | 4,458 | |||||
Total current assets | 385,549 | 357,046 | |||||
Property, plant and equipment at cost: | |||||||
Land and buildings | 40,508 | 40,424 | |||||
Construction equipment | 89,482 | 89,036 | |||||
Transportation equipment | 47,913 | 48,339 | |||||
Office equipment and software | 41,622 | 41,236 | |||||
Construction in progress | 2,411 | 1,353 | |||||
Total property, plant and equipment - at cost | 221,936 | 220,388 | |||||
Accumulated depreciation | (150,438 | ) | (147,743 | ) | |||
Property, plant and equipment - net | 71,498 | 72,645 | |||||
Goodwill | 93,451 | 96,162 | |||||
Other intangible assets | 22,007 | 22,814 | |||||
Deferred income taxes | 5,559 | 4,848 | |||||
Other assets | 9,130 | 4,518 | |||||
Total assets | $ | 587,194 | $ | 558,033 |
September 30, 2018 | June 30, 2018 | ||||||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 94,845 | $ | 79,439 | |||
Billings on uncompleted contracts in excess of costs and estimated earnings | 118,380 | 120,740 | |||||
Accrued wages and benefits | 29,151 | 24,375 | |||||
Accrued insurance | 9,689 | 9,080 | |||||
Income taxes payable | — | 7 | |||||
Other accrued expenses | 9,079 | 4,824 | |||||
Total current liabilities | 261,144 | 238,465 | |||||
Deferred income taxes | 1,440 | 429 | |||||
Borrowings under senior secured revolving credit facility | 1,549 | — | |||||
Other liabilities | 280 | 296 | |||||
Total liabilities | 264,413 | 239,190 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock—$.01 par value; 60,000,000 shares authorized; 27,888,217 shares issued as of September 30, 2018 and June 30, 2018; 27,019,817 and 26,853,823 shares outstanding as of September 30, 2018 and June 30, 2018 | 279 | 279 | |||||
Additional paid-in capital | 129,885 | 132,198 | |||||
Retained earnings | 213,799 | 211,494 | |||||
Accumulated other comprehensive loss | (7,010 | ) | (7,411 | ) | |||
336,953 | 336,560 | ||||||
Less: Treasury stock, at cost — 868,400 shares as of September 30, 2018, and 1,034,394 shares as of June 30, 2018 | (14,172 | ) | (17,717 | ) | |||
Total stockholders' equity | 322,781 | 318,843 | |||||
Total liabilities and stockholders’ equity | $ | 587,194 | $ | 558,033 |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 2,305 | $ | 3,824 | |||
Adjustments to reconcile net income to net cash provided by operating activities, net of effects from acquisitions and disposals: | |||||||
Depreciation and amortization | 4,543 | 5,593 | |||||
Stock-based compensation expense | 2,585 | 2,086 | |||||
Deferred income tax | 362 | 2,711 | |||||
Gain on disposal of business (Note 3) | (427 | ) | — | ||||
Gain on sale of property, plant and equipment | (171 | ) | (121 | ) | |||
Provision for uncollectible accounts | 76 | 7 | |||||
Other | 101 | 93 | |||||
Changes in operating assets and liabilities increasing (decreasing) cash, net of effects from acquisitions and disposals: | |||||||
Accounts receivable | (11,284 | ) | (7,734 | ) | |||
Costs and estimated earnings in excess of billings on uncompleted contracts | 302 | 25,227 | |||||
Inventories | (1,369 | ) | (532 | ) | |||
Other assets and liabilities | (10,860 | ) | (5,291 | ) | |||
Accounts payable | 15,261 | (14,463 | ) | ||||
Billings on uncompleted contracts in excess of costs and estimated earnings | (2,229 | ) | (9,568 | ) | |||
Accrued expenses | 9,624 | 4,998 | |||||
Net cash provided by operating activities | 8,819 | 6,830 | |||||
Investing activities: | |||||||
Proceeds from disposal of business (Note 3) | 3,693 | — | |||||
Acquisition of property, plant and equipment | (2,482 | ) | (1,878 | ) | |||
Proceeds from asset sales | 267 | 248 | |||||
Net cash provided (used) by investing activities | $ | 1,478 | $ | (1,630 | ) |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Financing activities: | |||||||
Advances under senior secured revolving credit facility | $ | 2,298 | $ | 24,890 | |||
Repayments of advances under senior secured revolving credit facility | (765 | ) | (27,496 | ) | |||
Payment of debt amendment fees | — | (340 | ) | ||||
Issuances of common stock | 128 | — | |||||
Proceeds from issuance of common stock under employee stock purchase plan | 78 | 66 | |||||
Repurchase of common stock for payment of statutory taxes due on equity-based compensation | (1,559 | ) | (454 | ) | |||
Net cash provided (used) by financing activities | 180 | (3,334 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 202 | 414 | |||||
Increase in cash and cash equivalents | 10,679 | 2,280 | |||||
Cash and cash equivalents, beginning of period | 64,057 | 43,805 | |||||
Cash and cash equivalents, end of period | $ | 74,736 | $ | 46,085 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Income taxes | $ | 66 | $ | 98 | |||
Interest | $ | 456 | $ | 582 | |||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment on account | $ | 274 | $ | 191 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income(Loss) | Total | ||||||||||||||||||
Balances, July 1, 2018 | $ | 279 | $ | 132,198 | $ | 211,494 | $ | (17,717 | ) | $ | (7,411 | ) | $ | 318,843 | |||||||||
Net income | — | — | 2,305 | — | — | 2,305 | |||||||||||||||||
Other comprehensive income | — | — | — | — | 401 | 401 | |||||||||||||||||
Treasury shares sold to Employee Stock Purchase Plan (4,323 shares) | — | (4 | ) | — | 82 | — | 78 | ||||||||||||||||
Exercise of stock options (12,500 shares) | — | (126 | ) | — | 254 | — | 128 | ||||||||||||||||
Issuance of deferred shares (221,775 shares) | — | (4,768 | ) | — | 4,768 | — | — | ||||||||||||||||
Treasury shares purchased to satisfy tax withholding obligations (72,604 shares) | — | — | — | (1,559 | ) | — | (1,559 | ) | |||||||||||||||
Stock-based compensation expense | — | 2,585 | — | — | — | 2,585 | |||||||||||||||||
Balances, September 30, 2018 | $ | 279 | $ | 129,885 | $ | 213,799 | $ | (14,172 | ) | $ | (7,010 | ) | $ | 322,781 | |||||||||
Balances, July 1, 2017 | $ | 279 | $ | 128,419 | $ | 222,974 | $ | (22,539 | ) | $ | (7,324 | ) | $ | 321,809 | |||||||||
Net income | — | — | 3,824 | — | — | 3,824 | |||||||||||||||||
Other comprehensive income | — | — | — | — | 1,107 | 1,107 | |||||||||||||||||
Treasury shares sold to Employee Stock Purchase Plan (7,121 shares) | — | (96 | ) | — | 162 | — | 66 | ||||||||||||||||
Issuance of deferred shares (163,201 shares) | — | (2,883 | ) | — | 2,883 | — | — | ||||||||||||||||
Treasury shares purchased to satisfy tax withholding obligations (42,909 shares) | — | — | — | (454 | ) | — | (454 | ) | |||||||||||||||
Stock-based compensation expense | — | 2,086 | — | — | — | 2,086 | |||||||||||||||||
Balances, September 30, 2017 | $ | 279 | $ | 127,526 | $ | 226,798 | $ | (19,948 | ) | $ | (6,217 | ) | $ | 328,438 |
September 30, 2018 | June 30, 2018 | Change | |||||||||
(in thousands) | |||||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 75,972 | $ | 76,632 | $ | (660 | ) | ||||
Billings on uncompleted contracts in excess of costs and estimated earnings | (118,380 | ) | (120,740 | ) | 2,360 | ||||||
Net contract liabilities | $ | (42,408 | ) | $ | (44,108 | ) | $ | 1,700 |
September 30, 2018 | June 30, 2018 | ||||||
(in thousands) | |||||||
Costs incurred and estimated earnings recognized on uncompleted contracts | $ | 2,318,949 | $ | 2,081,799 | |||
Billings on uncompleted contracts | 2,361,357 | 2,125,907 | |||||
Net contract liabilities | $ | (42,408 | ) | $ | (44,108 | ) |
Three Months Ended | ||||||||
September 30, 2018 | September 30, 2017 | |||||||
(In thousands) | ||||||||
United States | $ | 310,137 | $ | 221,772 | ||||
Canada | 7,081 | 46,860 | ||||||
Other international | 1,293 | 1,278 | ||||||
Total Revenue | $ | 318,511 | $ | 269,910 |
Electrical Infrastructure | Oil Gas & Chemical | Storage Solutions | Industrial | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Net balance at June 30, 2018 | $ | 24,826 | $ | 33,604 | $ | 16,760 | $ | 20,972 | $ | 96,162 | |||||||||
Disposal of business(1) | — | (2,775 | ) | — | — | (2,775 | ) | ||||||||||||
Translation adjustment(2) | 21 | — | 39 | 4 | 64 | ||||||||||||||
Net balance at September 30, 2018 | $ | 24,847 | $ | 30,829 | $ | 16,799 | $ | 20,976 | $ | 93,451 |
(1) | The Company disposed of a business that marketed process heating equipment. See Note 3 - Disposals for more information about the disposal. The business disposed of constituted its own reporting unit and the amount of goodwill written off was all of the goodwill assigned to that reporting unit. None of the goodwill was considered impaired since the Company recorded a gain on the disposal. |
(2) | The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency. |
At September 30, 2018 | |||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(Years) | (In thousands) | ||||||||||||
Intellectual property | 10 to 15 | $ | 2,579 | $ | (1,647 | ) | $ | 932 | |||||
Customer-based | 6 to 15 | 38,632 | (17,590 | ) | 21,042 | ||||||||
Non-compete agreements | 4 | 1,453 | (1,420 | ) | 33 | ||||||||
Total amortizing intangible assets | $ | 42,664 | $ | (20,657 | ) | $ | 22,007 |
At June 30, 2018 | |||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(Years) | (In thousands) | ||||||||||||
Intellectual property | 9 to 15 | $ | 2,579 | $ | (1,603 | ) | $ | 976 | |||||
Customer-based | 6 to 15 | 38,562 | (16,763 | ) | 21,799 | ||||||||
Non-compete agreements | 4 | 1,453 | (1,414 | ) | 39 | ||||||||
Total amortizing intangible assets | $ | 42,594 | $ | (19,780 | ) | $ | 22,814 |
Period ending: | |||
Remainder of Fiscal 2019 | $ | 2,872 | |
Fiscal 2020 | 3,697 | ||
Fiscal 2021 | 3,678 | ||
Fiscal 2022 | 2,823 | ||
Fiscal 2023 | 2,369 | ||
Fiscal 2024 | 2,094 | ||
Thereafter | 4,474 | ||
Total estimated remaining amortization expense at September 30, 2018 | $ | 22,007 |
• | Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00. |
• | We are required to maintain a Fixed Charge Coverage Ratio, determined as of the end of each fiscal quarter, greater than or equal to 1.25 to 1.00. |
• | Asset dispositions (other than dispositions in which all of the net cash proceeds therefrom are reinvested into the Company and dispositions of inventory and obsolete or unneeded equipment in the ordinary course of business) are limited to $20.0 million per 12-month period. |
• | The ABR or the Adjusted LIBO Rate, in the case of revolving loans denominated in U.S. Dollars; |
• | The Canadian Prime Rate or the CDOR rate, in the case of revolving loans denominated in Canadian Dollars; |
• | The Adjusted LIBO Rate, in the case of revolving loans denominated in Pounds Sterling or Australian Dollars; or |
• | The EURIBO Rate, in the case of revolving loans denominated in Euros, |
September 30, 2018 | June 30, 2018 | ||||||
(In thousands) | |||||||
Senior secured revolving credit facility | $ | 300,000 | $ | 300,000 | |||
Capacity constraint due to the Leverage Ratio | 206,208 | 189,741 | |||||
Capacity under the credit facility | 93,792 | 110,259 | |||||
Borrowings outstanding | 1,549 | — | |||||
Letters of credit | 37,684 | 37,073 | |||||
Availability under the senior secured revolving credit facility | $ | 54,559 | $ | 73,186 |
• | eliminating the deduction for domestic production activity; |
• | limiting the annual deduction for business interest; |
• | taxing global intangible low-tax income; |
• | allowing a deduction for domestically earned foreign intangible income; and |
• | establishing a new base erosion and anti-abuse tax on payments between U.S. taxpayers and foreign related parties. |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
(In thousands, except per share data) | |||||||
Basic EPS: | |||||||
Net income | $ | 2,305 | $ | 3,824 | |||
Weighted average shares outstanding | 26,921 | 26,655 | |||||
Basic earnings per share | $ | 0.09 | $ | 0.14 | |||
Diluted EPS: | |||||||
Weighted average shares outstanding – basic | 26,921 | 26,655 | |||||
Dilutive stock options | 31 | 10 | |||||
Dilutive nonvested deferred shares | 637 | 97 | |||||
Diluted weighted average shares | 27,589 | 26,762 | |||||
Diluted earnings per share | $ | 0.08 | $ | 0.14 |
Three Months Ended | |||||
September 30, 2018 | September 30, 2017 | ||||
(In thousands) | |||||
Nonvested deferred shares | 167 | 718 |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Gross revenues | |||||||
Electrical Infrastructure | $ | 44,701 | $ | 79,971 | |||
Oil Gas & Chemical | 75,562 | 85,861 | |||||
Storage Solutions | 113,767 | 71,572 | |||||
Industrial | 85,557 | 33,271 | |||||
Total gross revenues | $ | 319,587 | $ | 270,675 | |||
Less: Inter-segment revenues | |||||||
Oil Gas & Chemical | $ | 71 | $ | 208 | |||
Storage Solutions | 1,005 | 557 | |||||
Total inter-segment revenues | $ | 1,076 | $ | 765 | |||
Consolidated revenues | |||||||
Electrical Infrastructure | $ | 44,701 | $ | 79,971 | |||
Oil Gas & Chemical | 75,491 | 85,653 | |||||
Storage Solutions | 112,762 | 71,015 | |||||
Industrial | 85,557 | 33,271 | |||||
Total consolidated revenues | $ | 318,511 | $ | 269,910 | |||
Gross profit | |||||||
Electrical Infrastructure | $ | 3,383 | $ | 8,267 | |||
Oil Gas & Chemical | 5,625 | 11,038 | |||||
Storage Solutions | 9,553 | 7,540 | |||||
Industrial | 4,860 | 2,046 | |||||
Total gross profit | $ | 23,421 | $ | 28,891 | |||
Operating income (loss) | |||||||
Electrical Infrastructure | $ | 657 | $ | 3,577 | |||
Oil Gas & Chemical | 514 | 4,134 | |||||
Storage Solutions | 285 | (75 | ) | ||||
Industrial | 764 | (315 | ) | ||||
Total operating income | $ | 2,220 | $ | 7,321 |
September 30, 2018 | June 30, 2018 | |||||||
Electrical Infrastructure | $ | 159,595 | $ | 161,207 | ||||
Oil Gas & Chemical | 109,417 | 111,064 | ||||||
Storage Solutions | 163,125 | 149,695 | ||||||
Industrial | 61,080 | 58,816 | ||||||
Unallocated assets | 93,977 | 77,251 | ||||||
Total segment assets | $ | 587,194 | $ | 558,033 |
• | fixed-price awards; |
• | minimum customer commitments on cost plus arrangements; and |
• | certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts. |
Electrical Infrastructure | Oil Gas & Chemical | Storage Solutions | Industrial | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Backlog as of June 30, 2018 | $ | 113,957 | $ | 227,452 | $ | 613,360 | $ | 263,827 | $ | 1,218,596 | |||||||||
Project awards | 39,589 | 37,531 | 85,139 | 47,128 | 209,387 | ||||||||||||||
Revenue recognized | (44,701 | ) | (75,491 | ) | (112,762 | ) | (85,557 | ) | (318,511 | ) | |||||||||
Backlog as of September 30, 2018 | $ | 108,845 | $ | 189,492 | $ | 585,737 | $ | 225,398 | $ | 1,109,472 | |||||||||
Book-to-bill ratio(1) | 0.9 | 0.5 | 0.8 | 0.6 | 0.7 |
(1) | Calculated by dividing project awards by revenue recognized during the period. |
• | It does not include interest expense. Because we have borrowed money to finance our operations and acquisitions, pay commitment fees to maintain our credit facility, and incur fees to issue letters of credit under the credit facility, interest expense is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations. |
• | It does not include income taxes. Because the payment of income taxes is a necessary and ongoing part of our operations, any measure that excludes income taxes has material limitations. |
• | It does not include depreciation or amortization expense. Because we use capital and intangible assets to generate revenue, depreciation and amortization expense is a necessary element of our cost structure. Therefore, any measure that excludes depreciation or amortization expense has material limitations. |
Three Months Ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
(In thousands) | |||||||
Net income | $ | 2,305 | $ | 3,824 | |||
Interest expense | 292 | 618 | |||||
Provision for income taxes | 451 | 3,067 | |||||
Depreciation and amortization | 4,543 | 5,593 | |||||
EBITDA | $ | 7,591 | $ | 13,102 |
Liquidity as of June 30, 2018 | $ | 137,243 | |
Net increase in cash | 10,679 | ||
Increase in credit facility capacity constraint | (16,467 | ) | |
Net borrowings on credit facility | (1,533 | ) | |
Increase in letters of credit outstanding | (611 | ) | |
Foreign currency translation of outstanding borrowings | (16 | ) | |
Liquidity as of September 30, 2018 | $ | 129,295 |
• | Changes in costs and estimated earnings in excess of billings on uncompleted contracts and billings on uncompleted contracts in excess of costs due to contract terms that determine the timing of billings to customers and the collection of those billings: |
• | Some cost plus and fixed price customer contracts are billed based on milestones which may require us to incur significant expenditures prior to collections from our customers. |
• | Time and material contracts are normally billed in arrears. Therefore, we are routinely required to carry these costs until they can be billed and collected. |
• | Some of our large construction projects may require security in the form of letters of credit or significant retentions. The timing of collection of retentions is often uncertain. |
• | Other changes in working capital |
• | Capital expenditures |
• | Acquisitions and disposals of businesses |
• | Strategic investments in new operations |
• | Purchases of shares under our stock buyback program |
• | Contract disputes, which can be significant |
• | Collection issues, including those caused by weak commodity prices or other factors which can lead to credit deterioration of our customers |
• | Capacity constraints under our senior secured revolving credit facility and remaining in compliance with all covenants contained in the credit agreement |
• | Cash on hand outside of the United States that cannot be repatriated without incremental taxation. |
Net income | $ | 2,305 | |
Non-cash expenses | 6,606 | ||
Deferred income tax | 362 | ||
Cash effect of changes in working capital | (555 | ) | |
Other | 101 | ||
Net cash provided by operating activities | $ | 8,819 |
• | Accounts receivable, net of bad debt expense recognized during the period, increased by $11.3 million during the three months ended September 30, 2018, which decreased cash flows from operating activities. The variance is attributable to the timing of billing and collections and increasing business volumes during the fiscal quarter. |
• | Accounts payable increased by $15.3 million during the three months ended September 30, 2018, which increased cash flows from operating activities. The variance is primarily attributable to the timing of vendor payments and increasing business volumes during the fiscal quarter. |
• | Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") decreased $0.3 million, which increased cash flows from operating activities. Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $2.2 million, which decreased cash flows from operating activities. The net change in CIE and BIE decreased cash $1.9 million for the three months ended September 30, 2018. CIE and BIE balances can experience significant fluctuations based on the timing of when job costs are incurred and the invoicing of those job costs to the customer. |
• | Our Leverage Ratio, determined as of the end of each fiscal quarter, may not exceed 3.00 to 1.00. |
• | We are required to maintain a Fixed Charge Coverage Ratio, determined as of the end of each fiscal quarter, greater than or equal to 1.25 to 1.00. |
• | Asset dispositions (other than dispositions in which all of the net cash proceeds therefrom are reinvested into the Company and dispositions of inventory and obsolete or unneeded equipment in the ordinary course of business) are limited to $20.0 million per 12-month period. |
• | The ABR or the Adjusted LIBO Rate, in the case of revolving loans denominated in U.S. Dollars; |
• | The Canadian Prime Rate or the CDOR rate, in the case of revolving loans denominated in Canadian Dollars; |
• | The Adjusted LIBO Rate, in the case of revolving loans denominated in Pounds Sterling or Australian Dollars; or |
• | The EURIBO Rate, in the case of revolving loans denominated in Euros, |
• | exclude non-cash stock-based compensation expense, |
• | include pro forma EBITDA of acquired businesses as if the acquisition occurred at the beginning of the previous four quarters, and |
• | exclude certain other extraordinary items, as defined in the Credit Agreement. |
September 30, 2018 | June 30, 2018 | ||||||
(In thousands) | |||||||
Senior secured revolving credit facility | $ | 300,000 | $ | 300,000 | |||
Capacity constraint due to the Senior Leverage Ratio | 206,208 | 189,741 | |||||
Capacity under the credit facility | 93,792 | 110,259 | |||||
Borrowings outstanding | 1,549 | — | |||||
Letters of credit | 37,684 | 37,073 | |||||
Availability under the senior secured revolving credit facility | $ | 54,559 | $ | 73,186 |
• | our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements; |
• | the impact to our business of crude oil, natural gas and other commodity prices; |
• | amounts and nature of future revenues and margins from each of our segments; |
• | the potential impact of the Tax Cuts and Jobs Act on our business; |
• | trends in the industries we serve; |
• | the likely impact of new or existing regulations or market forces on the demand for our services; |
• | expansion and other trends of the industries we serve; |
• | our expectations with respect to the likelihood of a future impairment; and |
• | our ability to comply with the covenants in our credit agreement. |
• | the risk factors discussed in our Form 10-K for the fiscal year ended June 30, 2018 and listed from time to time in our filings with the Securities and Exchange Commission; |
• | economic, market or business conditions in general and in the oil, gas, power, iron and steel, agricultural and mining industries in particular; |
• | delays in the commencement of major projects, whether due to permitting issues or other factors; |
• | reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil and other commodity prices which affect our customers' businesses; |
• | the inherently uncertain outcome of current and future litigation; |
• | the adequacy of our reserves for claims and contingencies; |
• | changes in laws or regulations, including the imposition, cancellation or delay of tariffs on imported goods; and |
• | other factors, many of which are beyond our control. |
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (C) | |||||||||
July 1 to July 31, 2018 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 1,014,199 | |||||||
Employee Transactions (B) | 196 | $ | 19.65 | — | ||||||||
August 1 to August 31, 2018 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 1,014,199 | |||||||
Employee Transactions (B) | 70,090 | $ | 21.38 | — | ||||||||
September 1 to September 30, 2018 | ||||||||||||
Share Repurchase Program (A) | — | $ | — | — | 1,014,199 | |||||||
Employee Transactions (B) | 2,318 | $ | 24.40 | — |
(A) | Represents shares purchased under our stock buyback program. |
(B) | Represents shares withheld to satisfy the employee’s tax withholding obligation that is incurred upon the vesting of deferred shares granted under the Company’s stock incentive plans. |
(C) | In December 2016, the Board of Directors approved a stock buyback program (the "December 2016 Program"). Under the December 2016 Program, the Company may repurchase common stock of the Company in any calendar year commencing with calendar year 2016 and continuing through calendar year 2018, up to a maximum of $25.0 million per calendar year. The Company may repurchase its stock from time to time in the open market at prevailing market prices or in privately negotiated transactions. As described under the caption “Stock Repurchase Program and Treasury Shares” in the Liquidity and Capital Resources section of Part I, Item 2 of this Form 10-Q, on November 6, 2018, the Board of Directors approved a new stock buyback program (the “November 2018 Program”), which replaced the December 2016 Program. Under the November 2018 Program, the Company may repurchase common stock of the Company in any calendar year commencing with calendar year 2018, up to a maximum of $30.0 million per calendar year provided that the aggregate number of shares repurchased may not exceed 10%, or approximately 2.7 million, of the Company's shares outstanding as of November 6, 2018. The November 2018 Program will continue unless and until it is modified or revoked by the Board of Directors. The amount shown as the maximum number of shares that may yet be purchased was calculated using the closing price of our stock on the last trading day of the quarter and the cumulative limit of $25.0 million remaining under the December 2016 Program, which was still in place as of the end of the quarter. |
Exhibit No. | Description | |
Exhibit 10 | ||
Exhibit 31.1: | ||
Exhibit 31.2: | ||
Exhibit 32.1: | ||
Exhibit 32.2: | ||
Exhibit 95: | ||
Exhibit 101.INS: | XBRL Instance Document. | |
Exhibit 101.SCH: | XBRL Taxonomy Schema Document. | |
Exhibit 101.CAL: | XBRL Taxonomy Extension Calculation Linkbase Document. | |
Exhibit 101.DEF: | XBRL Taxonomy Extension Definition Linkbase Document. | |
Exhibit 101.LAB: | XBRL Taxonomy Extension Labels Linkbase Document. | |
Exhibit 101.PRE: | XBRL Taxonomy Extension Presentation Linkbase Document. |
MATRIX SERVICE COMPANY | ||
Date: | November 8, 2018 | By: /s/ Kevin S. Cavanah |
Kevin S. Cavanah Vice President and Chief Financial Officer signing on behalf of the registrant and as the registrant’s principal financial officer |
1. | I have reviewed this quarterly report on Form 10-Q of Matrix Service Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 8, 2018 | |
/s/ John R. Hewitt | ||
John R. Hewitt | ||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Matrix Service Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 8, 2018 | |
/s/ Kevin S. Cavanah | ||
Kevin S. Cavanah | ||
Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 8, 2018 | |
/s/ John R. Hewitt | ||
John R. Hewitt | ||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 8, 2018 | |
/s/ Kevin S. Cavanah | ||
Kevin S. Cavanah | ||
Vice President and Chief Financial Officer |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations(1) | Section 104(b) Orders(2) | Section 104(d) Citations and Orders(3) | Section 110(b)(2) Violations(4) | Section 107(a) Orders(5) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities | Received Notice of Pattern of Violations Under Section 104(e)(6) (yes/no) | Received Notice of Potential to Have Pattern of Violations Under Section 104(e)(7) (yes/no) | Total Number of Legal Actions Pending as of Last Day of Period | Total Number of Legal Actions Initiated During Period | Total Number of Legal Actions Resolved During Period |
Permanente Cement Plan & Quarry 04-04075 | — | — | — | — | — | $118 | — | No | No | 1 | — | 1 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 05, 2018 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | MTRX | |
Entity Registrant Name | MATRIX SERVICE CO | |
Entity Central Index Key | 0000866273 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 27,071,755 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||
Revenues | $ 318,511 | $ 269,910 |
Cost of revenues | 295,090 | 241,019 |
Gross profit | 23,421 | 28,891 |
Selling, general and administrative expenses | 21,201 | 21,570 |
Operating income | 2,220 | 7,321 |
Other income (expense): | ||
Interest expense | (292) | (618) |
Interest income | 282 | 39 |
Other | 546 | 149 |
Income before income tax expense | 2,756 | 6,891 |
Provision for federal, state and foreign income taxes | 451 | 3,067 |
Net income | $ 2,305 | $ 3,824 |
Basic earnings per common share (US$ per share) | $ 0.09 | $ 0.14 |
Diluted earnings per common share (US$ per share) | $ 0.08 | $ 0.14 |
Weighted average common shares outstanding: | ||
Basic (shares) | 26,921 | 26,655 |
Diluted (shares) | 27,589 | 26,762 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 2,305 | $ 3,824 |
Other comprehensive income, net of tax: | ||
Foreign currency translation gain (net of tax expense of $62 and $16 for the three months ended September 30, 2018 and 2017, respectively) | 401 | 1,107 |
Comprehensive income | $ 2,706 | $ 4,931 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | $ 62 | $ 16 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
---|---|---|
Statement Condensed Consolidated Balance Sheets [Abstract] | ||
Accounts receivable, allowances | $ 6,359 | $ 6,327 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 27,888,217 | 27,888,217 |
Common stock, shares outstanding | 27,019,817 | 26,853,823 |
Treasury stock, shares | 868,400 | 1,034,394 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Exercise of stock options, shares | 12,500 | 0 |
Issuance of deferred shares, shares | 221,775 | 163,201 |
Employee Stock Purchase Plan, shares | 4,323 | 7,121 |
Other treasury shares purchases, shares | 72,604 | 42,909 |
Basis of Presentation (Notes) |
3 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation and Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements include the accounts of Matrix Service Company (“Matrix”, “we”, “our”, “us”, “its” or the “Company”) and its subsidiaries, unless otherwise indicated. Intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The information furnished reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. The accompanying condensed financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2018, included in the Company’s Annual Report on Form 10-K for the year then ended. The results of operations for the three month period ended September 30, 2018 may not necessarily be indicative of the results of operations for the full year ending June 30, 2019. Significant Accounting Policies We have updated our revenue recognition accounting policy as a result of adopting the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). Our other significant accounting policies are detailed in "Note 1 - Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended June 30, 2018. Revenue Recognition Adoption of New Revenue Recognition Standard The Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) on July 1, 2018. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance, and is applicable to all of the Company's contracts with customers. The core principle of the revenue model is that "an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services." The Company used the modified retrospective method of application. Under the modified retrospective method, revenue recognized on completed contracts is not restated, however contracts in progress are accounted for as if they were under this new standard at inception. Any difference between historical revenue and revenue under the new standard is recorded as a cumulative effect adjustment to retained earnings as of the date of adoption. The cumulative impact of adopting Topic 606 was immaterial and did not require an adjustment to retained earnings. See Note 2 – Revenue for new disclosures required as a result of adopting Topic 606. General Information about our Contracts with Customers Our revenues come from contracts to provide engineering, procurement, construction, repair and maintenance and other services. Our engineering, procurement and construction services are usually provided in association with capital projects, which commonly are fixed price contracts and are billed based on project milestones. Our repair and maintenance services typically are cost reimbursable or time and material based contracts and are billed monthly or, for projects of short duration, at the conclusion of the project. The elapsed time from award to completion of performance may be in excess of one year for capital projects. Step 1: Contract Identification We do not recognize revenue unless we have identified a contract with a customer. A contract with a customer exists when it has approval and commitment from both parties, the rights and obligations of the parties are identified, payment terms are identified, the contract has commercial substance, and collectibility is probable. We also evaluate whether a contract should be combined with other contracts and accounted for as one single contract. This evaluation requires judgment and could change the timing of the amount of revenue and profit recorded for a given period. Step 2: Identify Performance Obligations Next, we identify each performance obligation in the contract. A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services to the customer. Revenue is recognized separately for each performance obligation in the contract. Many of our contracts have one clearly identifiable performance obligation. However, many of our contracts provide the customer an integrated service that includes two or more of the following services: engineering, procurement, fabrication, construction, repair and maintenance services. For these contracts, we do not consider the integrated services to be distinct within the context of the contract when the separate scopes of work combine into a single commercial objective or capability for the customer. Accordingly, we generally identify one performance obligation in our contracts. The determination of the number of performance obligations in a contract requires significant judgment and could change the timing of the amount of revenue and profit recorded for a given period. Step 3: Determine Contract Price After determining the performance obligations in the contract, we determine the contract price. The contract price is the amount of consideration we expect to receive from the customer for completing the performance obligation(s). In a fixed price contract, the contract price is a single lump-sum amount. In reimbursable and time and materials based contracts, the contract price is determined by the agreed upon rates or reimbursements for time and materials expended in completing the performance obligations(s) in the contract. A number of our contracts contain various cost and performance incentives and penalties that can either increase or decrease the contract price. These variable consideration amounts are generally earned or incurred based on certain performance metrics, most commonly related to project schedule or cost targets. We estimate variable consideration at the most likely amount of additional consideration to be received (or paid in the case of penalties), provided that meeting the variable condition is probable. We include estimated amounts of variable consideration in the contract price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the contract price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We reassess the amount of variable consideration each accounting period until the uncertainty associated with the variable consideration is resolved. Changes in the assessed amount of variable consideration are accounted for prospectively as a cumulative adjustment to revenue recognized in the current period. Step 4: Assign Contract Price to Performance Obligations After determining the price of the contract, we assign the contract price to the performance obligation(s) in the contract. Since nearly all of our contracts have only one performance obligation, all of the contract price is assigned to the single performance obligation. If a contract has multiple performance obligations, we assign the contract price to each performance obligation based on the stand-alone selling prices of the distinct services that comprise each performance obligation. Step 5: Recognize Revenue as Performance Obligations are Satisfied We record revenue for contracts with our customers as we satisfy the contracts' performance obligations. We recognize revenue on performance obligations associated with fixed price contracts for engineering, procurement and construction services over time since these services create or enhance assets the customer controls as they are being created or enhanced. We measure progress of satisfying these performance obligations by using the percentage-of-completion method, which is based on costs incurred to date compared to the total estimated costs at completion, since it best depicts the transfer of control of assets being created or enhanced to the customer. We recognize revenue over time for reimbursable and time and material based repair and maintenance contracts since the customer simultaneously receives and consumes the benefit of those services as we perform work under the contract. As a practical expedient allowed under ASC 606, we record revenue for these contracts in the amount to which we have a right to invoice for the services performed provided that we have a right to consideration from the customer in an amount that corresponds directly with the value of the performance completed to date. Costs incurred may include direct labor, direct materials, subcontractor costs and indirect costs, such as salaries and benefits, supplies and tools, equipment costs and insurance costs. Indirect costs are charged to projects based upon direct costs and overhead allocation rates per dollar of direct costs incurred or direct labor hours worked. Typically, customer contracts will include standard warranties that provide assurance that products and services will function as expected. The Company does not sell separate warranties. We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated. Change Orders Contracts are often modified through change orders, which are changes to the agreed upon scope of work. Most of our change orders, which may be priced or unpriced, are for goods or services that are not distinct from the existing contract due to the significant integration of services provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a change order on the contract price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. For unpriced change orders, we estimate the increase or decrease to the contract price using the variable consideration method described in the Step 3: Determine Contract Price paragraph above. Unpriced change orders are more fully discussed in Note 7 - Commitments and Contingencies. Claims Sometimes we seek claims for amounts in excess of the contract price for delays, errors in specifications and designs, contract terminations, change orders in dispute or other causes of additional costs incurred by us. Recognition of amounts as additional contract price related to claims is appropriate only if there is a legal basis for the claim. The determination of our legal basis for a claim requires significant judgment. We estimate the change to the contract price using the variable consideration method described in the Step 3: Determine Contract Price paragraph above. Claims are more fully discussed in Note 7 - Commitments and Contingencies. Recently Issued Accounting Standards Accounting Standards Update 2016-02, Leases (Topic 842) On February 25, 2016, the FASB issued ASU 2016-02 that amends accounting for leases. Under the new guidance, lessees will recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Prior to the issuance of ASU 2018-11 in July 2018, lessees and lessors were required to adopt the new standard using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, even though those leases may have expired before the new standard's effective date. The amendments in ASU 2018-11 provide, among other things, an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, the Company may apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than having to apply the new standard to the earliest comparative period presented in the financial statements. Both amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the amendments is permitted, but we do not plan to do so at this time. We are currently evaluating the ASU's expected impact on our financial statements. As of June 30, 2018 the Company had $33.1 million of future minimum lease payments under non-cancelable operating leases, primarily for facilities. See Note 8 of Item 8. Financial Statements and Supplementary Data in our 2018 Form 10-K for more information about the timing and amount of future operating lease payments, which we believe is indicative of the materiality of adoption of the ASU to our financial statements. Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments On June 16, 2016, the FASB issued ASU 2016-13, which will change how the Company accounts for its allowance for uncollectible accounts. The amendments in this update require a financial asset (or a group of financial assets) to be presented at the net amount expected to be collected. The income statement will reflect any increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Current GAAP delays the recognition of the full amount of credit losses until the loss is probable of occurring. The amendments in this update eliminate the probable initial recognition threshold and, instead, reflect the Company's current estimate of all expected credit losses. In addition, current guidance limits the information the Company may consider in measuring a credit loss to its past events and current conditions. The amendments in this update broaden the information the Company may consider in developing its expected credit loss estimate to include forecasted information. The amendments in this update are effective for the Company on July 1, 2020 and the Company may early adopt on July 1, 2019. The Company must apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. At this time, the Company does not expect this update to have a material impact to its estimate of the allowance for uncollectible accounts. Accounting Standards Update 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09 which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities should apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. The Company adopted ASU 2017-09 on July 1, 2018, which did not have a material impact on our financial position, results of operations or cash flows. |
Revenue Revenue (Notes) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] | Revenue Remaining Performance Obligations The Company had $958.9 million of remaining performance obligations yet to be satisfied as of September 30, 2018. The Company expects to recognize $733.7 million of its remaining performance obligations as revenue within the next twelve months. Contract Balances Contracts terms with customers include the timing of billing and payment, which usually differs from the timing of revenue recognition. As a result, we carry contract assets and liabilities in our balance sheet. These contract assets and liabilities are calculated on a contract-by-contract basis and reported on a net basis at the end of each period and are classified as current. We present our contract assets in the balance sheet as Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts ("CIE"). CIE consists of revenue recognized in excess of billings. We present our contract liabilities on the balance sheet as Billings on Uncompleted Contracts in Excess of Costs and Estimated Earnings ("BIE"). BIE consists of advance payments and billings in excess of revenue recognized. The following table provides information about CIE and BIE:
The difference between the beginning and ending balances of the Company's CIE and BIE primarily results from the timing of the Company's performance and its billings. The amount of revenue recognized in the three months ended September 30, 2018 that was included in the prior period BIE balance was $66.3 million. This revenue consists primarily of work performed during the period on contracts with customers that had advance billings. Gross amounts of contact assets and liabilities on uncompleted contracts are as follows:
Progress billings in accounts receivable at September 30, 2018 and June 30, 2018 included retentions to be collected within one year of $20.4 million and $25.9 million, respectively. Contract retentions collectible beyond one year are included in other assets in the Condensed Consolidated Balance Sheet and totaled $7.4 million as of September 30, 2018 and $2.6 million as of June 30, 2018. Disaggregated Revenue Revenue disaggregated by reportable segment is presented in Note 9 - Segment Information. The following table presents revenue disaggregated by the geographic area where the work was performed:
|
Disposals (Notes) |
3 Months Ended |
---|---|
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Disposals | Disposals Sale of Process Heating Business In August 2018, the Company sold non-core assets associated with a business that marketed process heating equipment for $3.9 million in cash, including $0.2 million of customary final post-closing adjustments paid in October 2018. The Company recognized a gain of $0.4 million on the sale, which was included in Other in the Condensed Consolidated Statements of Income. The revenues and operating results of the business, which were included in the Oil Gas & Chemical segment, are not material. |
Intangible Assets Including Goodwill (Notes) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Including Goodwill | Intangible Assets Including Goodwill Goodwill The changes in the carrying value of goodwill by segment are as follows:
The Company did not note any impairment indicators as of September 30, 2018. However, if our market view of project opportunities or gross margins deteriorates materially from the date of our last test, the Company may need to perform an interim analysis, which could result in the recognition of an additional material impairment to goodwill. Other Intangible Assets Information on the carrying value of other intangible assets is as follows:
Amortization expense totaled $0.8 million and $1.6 million during the three months ended September 30, 2018 and September 30, 2017, respectively. We estimate that the remaining amortization expense related to September 30, 2018 amortizing intangible assets will be as follows (in thousands):
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Debt (Notes) |
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Debt | Debt On February 8, 2017, the Company entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), by and among the Company and certain foreign subsidiaries, as Borrowers, various subsidiaries of the Company, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and the other Lenders party thereto. The Credit Agreement provides for a five-year senior secured revolving credit facility of $300.0 million that expires February 8, 2022. The credit facility may be used for working capital, acquisitions, capital expenditures, issuances of letters of credit and other lawful purposes. The Credit Agreement includes the following covenants and borrowing limitations:
The credit facility includes a sub-facility for revolving loans denominated in Australian Dollars, Canadian Dollars, Euros and Pounds Sterling in an aggregate amount not to exceed the U.S. Dollar equivalent of $75.0 million and a $200.0 million sublimit for letters of credit. Each revolving borrowing under the Credit Agreement will bear interest at a rate per annum equal to:
in each case, plus the Applicable Margin, which is based on the Company's Leverage Ratio. The Applicable Margin on ABR loans ranges between 0.625% and 1.625%. The Applicable Margin for Adjusted LIBO, EURIBO and CDOR loans ranges between 1.625% and 2.625% and the Applicable Margin for Canadian Prime Rate loans ranges between 2.125% and 3.125%. The unused credit facility fee is between 0.25% and 0.45% based on the Leverage Ratio. The Credit Agreement includes a Leverage Ratio covenant, which provides that Consolidated Funded Indebtedness, as of the end of any fiscal quarter, may not exceed 3.0 times Consolidated EBITDA, as defined in the Credit Agreement, or "Covenant EBITDA,"over the previous four quarters. For the four quarters ended September 30, 2018, Covenant EBITDA was $31.3 million. Consolidated Funded Indebtedness at September 30, 2018 was $39.2 million. Availability under the senior secured revolving credit facility at September 30, 2018 was as follows:
At September 30, 2018, the Company was in compliance with all affirmative, negative, and financial covenants under the Credit Agreement. |
Income Taxes (Notes) |
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Income Taxes | Income Taxes Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act makes broad and complex changes to the U.S. tax code, which have affected our current results and will affect our future results. The following are significant changes in the tax code that are effective for the Company beginning July 1, 2018:
The SEC staff issued SAB 118 which provides guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period that should not extend beyond one year from the Act’s enactment date for companies to complete the accounting under ASC 740. As of September 30, 2018, we have not completed our accounting for the tax effect of the Act. In accordance with SAB 118 and as discussed below, we have reflected the income tax effects of the those items where the accounting is complete; have recorded a provisional amount with regards for those items where the accounting is not complete but we have made a reasonable estimate; and have continued to account for items based on our existing accounting under ASC 740 in those areas where we have not been able to make a reasonable estimate. Accounting Complete Deferred Taxes Remeasurement We remeasured our domestic deferred tax assets and liabilities based on the rates at which we expect them to reverse in the future. At June 30, 2018, we completed the remeasurement of our domestic deferred tax assets and liabilities which resulted in an income tax benefit of $0.5 million included in fiscal 2018. Accounting not Complete - Provisional Amount Recorded One-time Transition Tax on Unrepatriated Earnings of Certain Foreign Subsidiaries The Act includes a one-time transition tax based on our total post-1986 foreign earnings and profits (E&P) which we have previously deferred from U.S. income taxes. We have not completed the calculations surrounding this tax, but based on our preliminary calculations, our foreign subsidiaries have overall negative E&P. Therefore, we do not anticipate incurring tax related to this provision of the Act since any return of assets would be a return of capital, not earnings. Due to the preliminary nature of our calculations, no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. Global Intangible Low-Tax Income (“GILTI”) The Act creates a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder. Because of the complexity of the new GILTI rules, we are continuing to evaluate this provision of the Act and the application of ASC 740. Under U.S. GAAP, we are allowed to make an accounting policy choice of either: 1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred or 2) factoring such amounts into the measurement of our deferred taxes. Our preliminary analysis indicates that we will treat GILTI taxes as a current period expense when incurred. Currently we project the tax impact of GILTI for fiscal 2019 to be immaterial. Accounting not Complete - Using Existing Accounting Under ASC 740 Valuation Allowances on Foreign Tax Credit Carryforwards We are currently assessing and have not completed our analysis of how various aspects of the Act such as deemed repatriation of foreign income, base erosion and anti-abuse tax (“BEAT”), deduction for foreign-derived intangible income (“FDII”), and new categories of foreign tax credits affect our ability to utilize our existing foreign tax credit carryforwards before they expire. Currently, we have stated our foreign tax credits at the amount at which we are more likely than not to realize the tax benefit before consideration of the tax law changes under the Act. Our completed analysis may result in an increased valuation allowance against our current foreign tax credit carryforwards. Indefinite Reinvestment Assertion Currently we do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. Our complete analysis of the Act may require us to provide for additional taxes to basis differences or withholding taxes on remitted foreign earnings. Effective Tax Rate Our effective tax rate for the three months ended September 30, 2018 was 16.4% compared to 44.5% in the same period last year. The effective tax rate for the three months ended September 30, 2018 was positively impacted by $0.3 million of excess tax benefits related to the vesting of stock-based compensation awards. The effective tax rate for the three months ended September 30, 2017 was negatively impacted by a higher mix of income in the U.S., which was taxed at a higher rate than the Company's foreign operations. In addition, the prior year effective tax rate was negatively affected by a $0.5 million tax shortfall on the vesting of stock-based compensation awards. We expect our effective income tax rate to be approximately 27.0% during fiscal 2019. |
Commitments and Contingencies (Notes) |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Insurance Reserves The Company maintains insurance coverage for various aspects of its operations. However, exposure to potential losses is retained through the use of deductibles, self-insured retentions and coverage limits. Typically our contracts require us to indemnify our customers for injury, damage or loss arising from the performance of our services and provide warranties for materials and workmanship. The Company may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies or surety bonds for specific customers or provide letters of credit in lieu of bonds to satisfy performance and financial guarantees on some projects. Matrix maintains a performance and payment bonding line sufficient to support the business. The Company generally requires its subcontractors to indemnify the Company and the Company’s customer and name the Company as an additional insured for activities arising out of the subcontractors’ work. We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of the Company, to secure the subcontractors’ work or as required by the subcontract. There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers. Unpriced Change Orders and Claims Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $18.8 million at September 30, 2018 and $15.0 million at June 30, 2018. Generally, collection of amounts related to unpriced change orders and claims is expected within twelve months. However, since customers may not pay these amounts until final resolution of related claims, collection of these amounts may extend beyond one year. Other The Company and its subsidiaries are participants in various legal actions. It is the opinion of management that none of the known legal actions will have a material impact on the Company’s financial position, results of operations or liquidity. |
Earnings per Common Share (Notes) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share | Earnings per Common Share Basic earnings per share (“Basic EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) includes the dilutive effect of stock options and nonvested deferred shares. The computation of basic and diluted earnings per share is as follows:
The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:
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Segment Information (Notes) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We operate our business through four reportable segments: Electrical Infrastructure; Oil Gas & Chemical; Storage Solutions; and Industrial. The Electrical Infrastructure segment consists of high voltage services provided to investor owned utilities, including construction of new substations, upgrades of existing substations, short-run transmission line installations, distribution upgrades and maintenance, as well as emergency and storm restoration services. We also provide construction and maintenance services to a variety of power generation facilities, such as combined cycle plants, and natural gas fired power stations. The Oil Gas & Chemical segment serves customers primarily in the downstream and midstream petroleum industries who are engaged in refining crude oil and processing, fractionating, and marketing of natural gas and natural gas liquids. We also perform work in the petrochemical, upstream petroleum, and sulfur extraction, recovery and processing markets. Our services include turnarounds, plant maintenance, engineering and capital construction. We also offer industrial cleaning services including hydro-blasting, hydro-excavating, advanced chemical cleaning and vacuum services. The Storage Solutions segment consists of work related to aboveground storage tanks ("AST") and terminals. Also included in this segment are cryogenic and other specialty storage tanks and terminals including liquefied natural gas, liquid nitrogen/liquid oxygen, liquid petroleum, other specialty vessels such as spheres as well as marine structures and truck and rail loading/offloading facilities. Our services include engineering, fabrication and construction, maintenance and repair, which includes planned and emergency services for both tanks and full terminals. Finally, we offer AST products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals. The Industrial segment consists of work for integrated iron and steel companies, major mining and minerals companies engaged primarily in the extraction of copper, as well as other companies in aerospace and defense, cement, agriculture and grain, food and other industries. Our services include engineering, fabrication and construction, maintenance and repair, which includes planned and emergency services. We also design instrumentation and control systems and offer specialized expertise in the design and construction of bulk material handling systems. The Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies footnote included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018. Intersegment sales and transfers are recorded at cost; therefore, no intersegment profit or loss is recognized. Segment assets consist primarily of cash and cash equivalents, accounts receivable, CIE/BIE, property, plant and equipment, goodwill and other intangible assets. Results of Operations (In thousands)
Total assets by segment were as follows:
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Basis of Presentation Revenue Recognition (Policies) |
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Revenue Recognition [Abstract] | |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Adoption of New Revenue Recognition Standard The Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) on July 1, 2018. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance, and is applicable to all of the Company's contracts with customers. The core principle of the revenue model is that "an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services." The Company used the modified retrospective method of application. Under the modified retrospective method, revenue recognized on completed contracts is not restated, however contracts in progress are accounted for as if they were under this new standard at inception. Any difference between historical revenue and revenue under the new standard is recorded as a cumulative effect adjustment to retained earnings as of the date of adoption. The cumulative impact of adopting Topic 606 was immaterial and did not require an adjustment to retained earnings. See Note 2 – Revenue for new disclosures required as a result of adopting Topic 606. General Information about our Contracts with Customers Our revenues come from contracts to provide engineering, procurement, construction, repair and maintenance and other services. Our engineering, procurement and construction services are usually provided in association with capital projects, which commonly are fixed price contracts and are billed based on project milestones. Our repair and maintenance services typically are cost reimbursable or time and material based contracts and are billed monthly or, for projects of short duration, at the conclusion of the project. The elapsed time from award to completion of performance may be in excess of one year for capital projects. Step 1: Contract Identification We do not recognize revenue unless we have identified a contract with a customer. A contract with a customer exists when it has approval and commitment from both parties, the rights and obligations of the parties are identified, payment terms are identified, the contract has commercial substance, and collectibility is probable. We also evaluate whether a contract should be combined with other contracts and accounted for as one single contract. This evaluation requires judgment and could change the timing of the amount of revenue and profit recorded for a given period. Step 2: Identify Performance Obligations Next, we identify each performance obligation in the contract. A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services to the customer. Revenue is recognized separately for each performance obligation in the contract. Many of our contracts have one clearly identifiable performance obligation. However, many of our contracts provide the customer an integrated service that includes two or more of the following services: engineering, procurement, fabrication, construction, repair and maintenance services. For these contracts, we do not consider the integrated services to be distinct within the context of the contract when the separate scopes of work combine into a single commercial objective or capability for the customer. Accordingly, we generally identify one performance obligation in our contracts. The determination of the number of performance obligations in a contract requires significant judgment and could change the timing of the amount of revenue and profit recorded for a given period. Step 3: Determine Contract Price After determining the performance obligations in the contract, we determine the contract price. The contract price is the amount of consideration we expect to receive from the customer for completing the performance obligation(s). In a fixed price contract, the contract price is a single lump-sum amount. In reimbursable and time and materials based contracts, the contract price is determined by the agreed upon rates or reimbursements for time and materials expended in completing the performance obligations(s) in the contract. A number of our contracts contain various cost and performance incentives and penalties that can either increase or decrease the contract price. These variable consideration amounts are generally earned or incurred based on certain performance metrics, most commonly related to project schedule or cost targets. We estimate variable consideration at the most likely amount of additional consideration to be received (or paid in the case of penalties), provided that meeting the variable condition is probable. We include estimated amounts of variable consideration in the contract price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the contract price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We reassess the amount of variable consideration each accounting period until the uncertainty associated with the variable consideration is resolved. Changes in the assessed amount of variable consideration are accounted for prospectively as a cumulative adjustment to revenue recognized in the current period. Step 4: Assign Contract Price to Performance Obligations After determining the price of the contract, we assign the contract price to the performance obligation(s) in the contract. Since nearly all of our contracts have only one performance obligation, all of the contract price is assigned to the single performance obligation. If a contract has multiple performance obligations, we assign the contract price to each performance obligation based on the stand-alone selling prices of the distinct services that comprise each performance obligation. Step 5: Recognize Revenue as Performance Obligations are Satisfied We record revenue for contracts with our customers as we satisfy the contracts' performance obligations. We recognize revenue on performance obligations associated with fixed price contracts for engineering, procurement and construction services over time since these services create or enhance assets the customer controls as they are being created or enhanced. We measure progress of satisfying these performance obligations by using the percentage-of-completion method, which is based on costs incurred to date compared to the total estimated costs at completion, since it best depicts the transfer of control of assets being created or enhanced to the customer. We recognize revenue over time for reimbursable and time and material based repair and maintenance contracts since the customer simultaneously receives and consumes the benefit of those services as we perform work under the contract. As a practical expedient allowed under ASC 606, we record revenue for these contracts in the amount to which we have a right to invoice for the services performed provided that we have a right to consideration from the customer in an amount that corresponds directly with the value of the performance completed to date. Costs incurred may include direct labor, direct materials, subcontractor costs and indirect costs, such as salaries and benefits, supplies and tools, equipment costs and insurance costs. Indirect costs are charged to projects based upon direct costs and overhead allocation rates per dollar of direct costs incurred or direct labor hours worked. Typically, customer contracts will include standard warranties that provide assurance that products and services will function as expected. The Company does not sell separate warranties. We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated. Change Orders Contracts are often modified through change orders, which are changes to the agreed upon scope of work. Most of our change orders, which may be priced or unpriced, are for goods or services that are not distinct from the existing contract due to the significant integration of services provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a change order on the contract price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. For unpriced change orders, we estimate the increase or decrease to the contract price using the variable consideration method described in the Step 3: Determine Contract Price paragraph above. Unpriced change orders are more fully discussed in Note 7 - Commitments and Contingencies. Claims Sometimes we seek claims for amounts in excess of the contract price for delays, errors in specifications and designs, contract terminations, change orders in dispute or other causes of additional costs incurred by us. Recognition of amounts as additional contract price related to claims is appropriate only if there is a legal basis for the claim. The determination of our legal basis for a claim requires significant judgment. We estimate the change to the contract price using the variable consideration method described in the Step 3: Determine Contract Price paragraph above. Claims are more fully discussed in Note 7 - Commitments and Contingencies. |
Revenue Revenue (Tables) |
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Contract with Customer, Asset and Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability [Table Text Block] | The following table provides information about CIE and BIE:
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Disclosure Customer Contracts Additional Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross and Net Amount of Uncompleted Contracts | Gross amounts of contact assets and liabilities on uncompleted contracts are as follows:
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Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The following table presents revenue disaggregated by the geographic area where the work was performed:
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Intangible Assets Including Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Value of Goodwill by Segment | The changes in the carrying value of goodwill by segment are as follows:
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Carrying Value of Other Intangible Assets | Information on the carrying value of other intangible assets is as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Availability Under the Senior Credit Facility | Availability under the senior secured revolving credit facility at September 30, 2018 was as follows:
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Earnings per Common Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | The computation of basic and diluted earnings per share is as follows:
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Antidilutive Securities Excluded from the Calculation of Diluted EPS | The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:
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Segment Information (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations | Results of Operations (In thousands)
Total assets by segment were as follows:
|
Basis of Presentation Basis of Presentation - Narrative (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Operating Leases, Future Minimum Payments Due | $ 33.1 |
Disposals (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Oct. 31, 2018 |
Aug. 31, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Business Acquisition [Line Items] | ||||
Business Combination, Consideration Transferred | $ 3,900 | |||
Acquisition Related Adjustment for Working Capital Settlement | $ 200 | |||
Gain (Loss) on Disposition of Business | $ 427 | $ 0 |
Intangible Assets Including Goodwill Future Expected Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 2,872 | |
Finite-Lived Intangible Assets, Amortization Expense, Next Year | 3,697 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 3,678 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 2,823 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 2,369 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 2,094 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 4,474 | |
Finite-Lived Intangible Assets, Net | $ 22,007 | $ 22,814 |
Debt - Availability Under The Senior Credit Facility (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
---|---|---|
Debt Disclosure [Abstract] | ||
Senior credit facility | $ 300,000 | $ 300,000 |
Capacity Constraint Due To Senior Leverage Ratio | 206,208 | 189,741 |
Line Of Credit Facility Maximum Borrowing Capacity After Consideration Of Capacity Constraint | 93,792 | 110,259 |
Line of Credit Facility, Amount Outstanding | 1,549 | 0 |
Letters of credit subject to the credit facility | 37,684 | 37,073 |
Availability under the senior credit facility | $ 54,559 | $ 73,186 |
Income Taxes Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, Percent | 16.40% | 44.50% |
Deferred tax remeasurement | $ 0.5 | |
Discrete item impact on effective tax rate | $ 0.3 | $ 0.5 |
Expected effective tax rate | 27.00% |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions |
Sep. 30, 2018 |
Jun. 30, 2018 |
---|---|---|
Project Unapproved Change Orders and Claims [Line Items] | ||
Unapproved change orders and claims | $ 18.8 | $ 15.0 |
Earnings per Common Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share, Basic [Abstract] | ||
Net income (loss) | $ 2,305 | $ 3,824 |
Weighted average shares outstanding - basic (shares) | 26,921 | 26,655 |
Basic EPS (US$ per share) | $ 0.09 | $ 0.14 |
Earnings Per Share, Diluted [Abstract] | ||
Dilutive stock options | 31 | 10 |
Dilutive nonvested deferred shares | 637 | 97 |
Diluted weighted average shares (shares) | 27,589 | 26,762 |
Diluted EPS (US$ per share) | $ 0.08 | $ 0.14 |
Earnings per Common Share - Antidilutive Securities Excluded from the Calculation of Diluted Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Nonvested Deferred Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities | 167 | 718 |
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